Ed Yardeni cuts S&P 500 year-end target to 7,900 as downturn risks mount

Ed Yardeni has spent much of the past few years as one of Wall Street’s most reliably upbeat voices. So when he reaches for the red pen on his S&P 500 forecast, the market tends to notice. Yardeni Research cut its year-end S&P 500 target from 8,400 to 7,900, citing rising bond yields and elevated uncertainty over the next three to six months. The revision, delivered in a client note titled “Proceed With Caution,” is less a panic signal and more a strategic gear-shift from a strategist who rarely admits the road ahead looks bumpy. What changed, and by how much The headline number dropped by 500 points, but the more telling move was in Yardeni’s scenario probabilities. His firm raised the odds of a bearish market outcome to 30%, up from 20%, while trimming the probability of the firm’s flagship “Roaring 2020s” bull case to 70% from 80%. The mechanics behind the target cut are fairly straightforward. Rising Treasury yields compress the valuation multiple investors are willing to assign to future corporate earnings. Yardeni lowered his assumed forward price-to-earnings ratio to 18.6 from 19.8, reflecting that yield pressure. Applied to the firm’s earnings outlook, a lower multi...